AKSHAR DEVELOPERS vs. ASST COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 4 (3) , MUMBAI AND ORS

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WP/11870/2022HC BombayHCBM01034750202217 October 2023Bench: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that for Assessment Year 2016-2017, the sanction for issuing notices should have been obtained under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). Consequently, the sanction was deemed invalid, rendering the notices issued based on it invalid and liable to be quashed. The Court further reasoned that if the notices are quashed due to invalid sanction, any subsequent assessment orders passed relying on such incorrect sanction would also have to be quashed. The Court extended this finding to Assessment Year 2017-2018, holding that the principles laid down in Siemens Financial Services Private Limited would squarely apply. Therefore, all notices, assessment orders, and consequential orders for AY 2017-2018 were also quashed and set aside. The Court also ordered the quashing of all consequential notices/demands issued under Section 156 or 271 of the Act. The ratio decidendi is that an invalid sanction under Section 151 invalidates the notice under Section 148 and all subsequent proceedings.

What were the facts?

These are writ petitions filed before the Bombay High Court concerning Assessment Years 2016-2017 and 2017-2018. The petitioners, including Avani Rasik Sontakke, are challenging notices and subsequent assessment orders issued by the Income Tax Officer and other revenue authorities. A central issue raised by the petitioners in all petitions is the alleged improper sanction obtained by the revenue for issuing these notices. The petitions were heard by a Division Bench of the High Court.

What were the issues?

1. Whether the sanction for issuing notices under Section 148 of the Income Tax Act, 1961, for Assessment Year 2016-2017 was improperly obtained, specifically whether it should have been under Section 151(ii) instead of Section 151(i) of the Act, rendering the sanction and subsequent notice invalid? 2. Whether the findings in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax, which held that sanction for AY 2016-2017 under Section 151(i) was invalid and notices should be quashed, apply to Assessment Year 2017-2018 as well? Assessee's Contention: The primary contention of the assessees, as stated by their counsels, is that the sanction obtained by the revenue for issuing notices was improper. They rely on the High Court's decision in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax. Revenue's Contention: The judgment does not record specific arguments made by the revenue on these issues.

Which sections of the Income-tax Act were involved?

Section 151,Section 148,Section 156,Section 271

AI-generated summary — verify with the full judgment below

Heard together (4 matters)

WP/5165/2022
WP/11870/2022
WP/12312/2022
WP(ST)/17167/2023

Read from the judgment's own cause title. This page is filed under one of them.

1/3 A.S. 912, 914, 915 & 936.WP-5165-2022& ors..doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION (912) WRIT PETITION NO.5165 OF 2022 Avani Rasik Sontakke

….Petitioner V/s. Income Tax Officer, Ward 2 & Ors. ....Respondents WITH (914) WRIT PETITION NO.11870 OF 2022 WITH (915) WRIT PETITION NO.12312 OF 2022 WITH (936) WRIT PETITION (ST.)NO.17167 OF 2023 ---- Mr. Riyaz Padvekar a/w. Mr. Tanzil Padvekar and Ms. Tejal Kharkar for petitioner in WP/5165/2022. Ms. Ritika Agarwal a/w. Ms. Ayesha Ansari i/b. Acelegal for petitioner in WP/11870/2022 and WP/12312/2022. Mr. Devendra Jain a/w. Ms. Radha Halbe and Mr. Ashwin Jain for petitioner in WP(ST)/17167/2023. Mr. Suresh Kumar for respondents–revenue in WP/5165/2022, WP/11870/2022 and WP/12312/2022. Mr. Manoj Shirsat for respondents-revenue in WP(ST)/17167/2023. ---- CORAM : K. R. SHRIRAM & NEELA GOKHALE, JJ.

DATED : 17th OCTOBER 2023 P.C. : 1 These are Petitions which relate to Assessment Year 2016- 2017 or 2017-2018. 2 Counsels state that in all these Petitions the issue of improper sanction having been obtained has been raised among other grounds, in the petition as well as during the hearing. Counsels state that the issue of improper sanction has been decided by this Court in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax Gauri Gaekwad 2023:BHC-AS:31458-DB

2/3 A.S. 912, 914, 915 & 936.WP-5165-2022& ors..doc and Others1, wherein the Court has held that for Assessment Year 2016- 2017, the sanction should have been given under Section 151(ii) and not under Section 151(i) of the Income Tax Act, 1961 (“the Act”) and consequently the sanction is invalid. The Court has stated that in view of the invalid sanction, the notice issued itself will be invalid and has to be quashed. We would also add, if the notice has to be quashed, if there is an assessment order passed subsequently, those assessment orders having been passed relying on an incorrect sanction, will also have to be quashed. Ordered accordingly. 3 Counsels further state that the findings in Siemens Financial Services Private Limited (supra) will squarely apply to the Assessment Year 2017-2018 as well. Therefore, all such notices issued for Assessment Year 2017-2018, the assessment orders and the consequential orders are also quashed and set aside. 4 In view of the above, all consequential notices/demands issued under Section 156 or 271 of the Act will also have to be quashed. Ordered accordingly. 5 All Petitions disposed. 6 We clarify that all other grounds could be raised by the parties at appropriate stage in any other proceeding. 1. (2023) 457 ITR 647 (Bom.) Gauri Gaekwad

3/3 A.S. 912, 914, 915 & 936.WP-5165-2022& ors..doc 7 In view of disposal of Petitions, pending interim application, if any, also stands disposed of accordingly. (NEELA GOKHALE, J.)

(K. R. SHRIRAM, J.) Gauri Gaekwad Signed by: Gauri A. Gaekwad Designation: PS To Honourable Judge Date: 20/10/2023 12:37:43

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